Correlation Between NIPPON STEEL and Platinum Investment
Can any of the company-specific risk be diversified away by investing in both NIPPON STEEL and Platinum Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NIPPON STEEL and Platinum Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON STEEL SPADR and Platinum Investment Management, you can compare the effects of market volatilities on NIPPON STEEL and Platinum Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NIPPON STEEL with a short position of Platinum Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON STEEL and Platinum Investment.
Diversification Opportunities for NIPPON STEEL and Platinum Investment
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between NIPPON and Platinum is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON STEEL SPADR and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment and NIPPON STEEL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NIPPON STEEL SPADR are associated (or correlated) with Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of NIPPON STEEL i.e., NIPPON STEEL and Platinum Investment go up and down completely randomly.
Pair Corralation between NIPPON STEEL and Platinum Investment
Assuming the 90 days trading horizon NIPPON STEEL SPADR is expected to generate 0.96 times more return on investment than Platinum Investment. However, NIPPON STEEL SPADR is 1.05 times less risky than Platinum Investment. It trades about 0.03 of its potential returns per unit of risk. Platinum Investment Management is currently generating about -0.01 per unit of risk. If you would invest 458.00 in NIPPON STEEL SPADR on September 26, 2024 and sell it today you would earn a total of 117.00 from holding NIPPON STEEL SPADR or generate 25.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIPPON STEEL SPADR vs. Platinum Investment Management
Performance |
| Timeline |
| NIPPON STEEL SPADR |
| Platinum Investment |
NIPPON STEEL and Platinum Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON STEEL and Platinum Investment
The main advantage of trading using opposite NIPPON STEEL and Platinum Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON STEEL position performs unexpectedly, Platinum Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Platinum Investment will offset losses from the drop in Platinum Investment's long position.| NIPPON STEEL vs. EIDESVIK OFFSHORE NK | NIPPON STEEL vs. Mitsui Chemicals | NIPPON STEEL vs. Penn National Gaming | NIPPON STEEL vs. ANGLER GAMING PLC |
| Platinum Investment vs. Tianjin Capital Environmental | Platinum Investment vs. DAIRY FARM INTL | Platinum Investment vs. BlueScope Steel Limited | Platinum Investment vs. NIPPON STEEL SPADR |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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